Top money-saving tips for the over 50s

The-over 50s have felt the effects of the recession more than most, as those who rely on the interest earned from their savings to supplement their income have been hard hit by plummeting rates and rising inflation.

This makes it more important than ever to make your cash work hard for you - so read on for some money-saving tips for the over 50s.

Get into the saving habit

As a saver you should aim to build up an “emergency fund,” and the easiest way to do this is by setting aside a small amount of money which you steadily increase as and when you can afford to.

The key is to maximise income by ensuring you are getting the top interest rates available, so check the rate you are being paid, and if you're not happy, switch to a provider prepared to pay you more.

Check the rate on dedicated accounts

In the past, dedicated accounts for the over 50s offered preferential rates, but those days appear to be over - at least for now - so you need to check whether you are actually getting any additional benefits, as there may be more competitive mainstream easy-access accounts on the market.

At present, the best rate on an over-50s deal is from Stroud & Swindon building society, paying 3.2 per cent on a minimum of £1,000 - with 90 days' notice required to access your money.

However, you can currently earn 3.3 per cent on £1,000 with an open-market account from the Coventry building society; this rate includes a 1.3 per cent bonus for 12 months.

Pick the right type of account

The first port of call for any saver should be an individual savings account (Isa), and while the limit currently stands at £3,600 for those under 50, this threshold has increased to £5,100 for those aged over 50 - making it more important than ever to make full use of this tax-free allowance.

Once you've used up your Isa, look to lock any further spare cash in a fixed-rate bond, as these typically pay far higher rates than variable accounts.

Don't settle for insurance renewals

Staying loyal to your insurance company simply doesn't pay because your premium is likely to increase each year, so when you receive a renewal notice - whether for home, motor or travel - compare prices with those being offered elsewhere.

And as before, don't be lured in by the gimmick of a dedicated “over-50s policy” without checking whether the premium is competitive.

Switch utility providers

If you've never switched energy suppliers, you could be wasting hundreds of pounds, so take the time to find the cheapest tariff in your area, and look into whether you can make further savings by moving to dual fuel, signing up to an online plan, and paying monthly by direct debit.

Those aged over 60 are also eligible to claim for the government's Winter Fuel Payment - rising to as much as £400 for those aged 80 or over - and if the temperature drops to zero or below for seven consecutive days, you may also be eligible to receive the Cold Weather Payment.

Do your research

Older consumers have grown into a market force to be reckoned with, and financial institutions are increasingly vying for the lucrative “grey pound.”

But bear in mind that just because you're a mature customer, you will not automatically benefit from these niche products, as it's only by scouring the whole market that you can be sure of getting the best deal for you.

All rates correct as of 22/01/10

Curious as to how much you could save with different interest rates? Our savings calculator tool does exactly that.

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